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How to Buy an Advertising and Marketing Business

Discover more about buying an advertising and marketing business.

The advertising and marketing sector can be a very lucrative industry to get into, with high annual growth and an increase in online spending. However, you will need to have certain skills and knowledge before you break onto the advertising scene. 

A buyer’s profile

To run a successful advertising business, you need to have considerable experience working in the industry. When you’re working for other companies you will build up a wealth of contacts, gain the specialist industry skills necessary to understand the market. 

You need to have great communication skills and be passionate about what you can offer your clients. There is a lot of competition in the marketing world, so you need to leave a lasting impression when you’re meeting with potential clients.

Creative flair and abstract thinking can also get you far in marketing. Many of South Africa’s most memorable advertising campaigns are controversial and push the boundaries; such as the political and topical Nando ads, and Brand South Africa’s poignant television campaigns.

Finance and statistics

In 2018, the advertising market was estimated to be worth R36.6 billion; television and radio ad spending accounted for the largest share, at roughly 21%. Online advertising in South Africa is predicted to account for just less than 23% percent of the total market. 

Internet ad spending is forecast to grow to R9.4 billion in 2022; with many advertising and marketing companies focusing solely on digital services. However, of the 31 million active internet users in South Africa, 43% of those surveyed use ad blocking tools.

There are business grants and support services that help certain demographic groups; such as the National Youth Development Agency, who offer funds for young entrepreneurs aged between 18 and 35 years old to help them start or grow their own business.

The government also offers loans for black entrepreneurs, female business owners or for previously disadvantaged people looking to get into business. The Grant Assist website is a great resource where you can browse all possible funding and support opportunities on offer.

What to look for in a business

When you’re looking to buy a marketing company, you should consider the company’s operating history: how many campaigns have they completed; how much revenue has the company generated year-on-year; how stable and reliable is the current team of employees? 

You should review the business’s online presence: how much traffic does the website generate; what channels are used to attract business; does the company have a strong brand presence? If you plan to rebrand the business, consider how much time and money this will cost.

What type of clients does the business generally target, and what is the typical advertising budget? Familiarise yourself with the main competition within this demographic and consider what specialist skills and USPs the business employs to attract clients over its competitors. 

Due diligence

There are specific questions you need to ask when you’re buying an advertising and marketing business. Where does the company’s website traffic come from? Is it through social media, organic browsing, emails, referrals, paid or direct? A well-diversified and high-quality traffic portfolio is favourable.

What’s the company’s click-through rate? Don’t be put off if it’s low, as this is an aspect that’s easy to fix and shows there is room to maximise revenue. You also need to evaluate how high the website ranks on Google and other search engines and consider the quality of the content and keyword diversity. 

Establish how much of the business is made up through direct advertising and repeat business. Make sure that you have a legal contract in place so that the owner cannot take their client list with them and open another ad agency.

Is it right for you?

If you’re a dab hand at analysing website metrics, enjoy socialising and establishing business connections and can lead and inspire a creative team, then you already have some of the essential skills needed to excel within the advertising and marketing sector.

You will need to have the confidence to compete with other agencies and have an astute understanding of who your clients are and what they want. You and your team will need the skills to deliver results-driven and creatively inspiring marketing campaigns.

You will also need a deep understanding of the advertising industry and know how to stay ahead of the curve. Recruitment and training skills are also necessary and expect to work and manage a lot of different personalities; from tech experts to the more artistically inclined.



Krystena Griffin

About the author

Krystena Griffin writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

@Be_TheBoss

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